Stock Analysis

How Much Did Giordano International's(HKG:709) Shareholders Earn From Share Price Movements Over The Last Three Years?

SEHK:709
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The truth is that if you invest for long enough, you're going to end up with some losing stocks. But the long term shareholders of Giordano International Limited (HKG:709) have had an unfortunate run in the last three years. Unfortunately, they have held through a 69% decline in the share price in that time. And over the last year the share price fell 47%, so we doubt many shareholders are delighted. The falls have accelerated recently, with the share price down 12% in the last three months.

See our latest analysis for Giordano International

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

Over the three years that the share price declined, Giordano International's earnings per share (EPS) dropped significantly, falling to a loss. This was, in part, due to extraordinary items impacting earnings. Due to the loss, it's not easy to use EPS as a reliable guide to the business. However, we can say we'd expect to see a falling share price in this scenario.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

earnings-per-share-growth
SEHK:709 Earnings Per Share Growth December 15th 2020

Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. As it happens, Giordano International's TSR for the last 3 years was -62%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

While the broader market gained around 8.0% in the last year, Giordano International shareholders lost 44% (even including dividends). However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 9% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. It's always interesting to track share price performance over the longer term. But to understand Giordano International better, we need to consider many other factors. Even so, be aware that Giordano International is showing 1 warning sign in our investment analysis , you should know about...

But note: Giordano International may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on HK exchanges.

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